Another strand of American policy emerged in
1947. In Washington there was a belief that communism could only be stopped if
Western Europe became wealthy. By the spring of 1947 it was clear that without
American help there was little chance of economic recovery.

The USA decided to offer massive economic aid
to Western Europe. The project was organized by the American Secretary of
State, General George Marshall, and was known as the Marshall Plan. Marshall
announced his scheme in a speech at Harvard University in June 1947.

A large amount of American money was made
available to those European countries which made an acceptable application. The
Soviet Union was, in theory, able to apply for help. However, Stalin saw the
plan as an attempt to impose capitalist ideas on European countries. He refused
to have anything to do with it.

The governments of Poland and Czechoslovakia
wanted to join the Marshall Plan but Stalin ordered them not to take part.
Stalin was right in thinking that Marshall Plan money would be tied to
American-style ideas. The Plan was based on a belief that communism would be
much less attractive to ordinary people if they had good jobs and were well
paid.

Leaders of 16 West European countries met in
Paris between July and September 1947 and wrote a recovery plan. The military
governors of western Germany took part. The US accepted the plan and the first
American money was transferred. The Marshall Plan was a step towards the
division of Germany and this angered the Soviet authorities. Economically, the
western area of Germany was now functioning as if it was a separate country
from the eastern sector.

The Plan was a great success. Over four years,
$13,000 million of help was provided. European countries were encouraged to
reduce import taxes and this increased the level of trade. By 1952, when the
Marshall Plan officially ended, the countries of Western Europe were well on
the road to a period of great economic prosperity. The Plan was also very
useful to the USA. By rebuilding Western Europe, America was creating wealthy
trade partners who would want to buy large amounts of American goods.

The Soviet response

The Soviet Union organized an international
conference in September 1947 in order to condemn the Truman Doctrine and the
Marshall Plan. A new organization was set up to strengthen the links between
communist parties in different countries. It was called Cominform (The
Communist Information Bureau).

Communists in Western countries were told to
try to wreck the Marshall Plan through strikes. There were very large communist
parties in France and Italy. In the winter of 1947-8 communist workers in these
two countries organized a series of strikes and demonstrations. This attempt to
wreck the Marshall Plan did not work. Despite the strikes, American money
flowed into Western Europe and eventually the strikes came to an end.

Comecon

Having failed to destroy the Marshall Plan the
USSR created its own economic block of countries in Eastern Europe. In January
1949 Comecon (the Council for Mutual Economic Aid) was set up. It was a trading
organization of communist countries but was nowhere near as successful as the
Marshall Plan. It did not involve any injection of money into East European
countries. Eventually the Soviet Union used it to encourage each country to
specialize in different products.